Here’s Nick Clegg’s latest missive to Lib Dem members and supporters — this week focusing on his efforts to get Britain building again to help those households in need of decent, affordable housing…

I’m writing this as we come to the end of an incredibly hectic week in politics.

The negotiations over the budget in Europe, securing of a much needed ceasefire in Gaza, rising speculation about the upcoming Leveson report. And Ed Davey’s important announcement of a landmark coalition deal on low carbon energy that will deliver billions of pounds of investment in clean technology and create thousands of jobs.

But in this letter I want to focus on an issue that wasn’t so high on the radar screen, but matters enormously to me: housing. I gave a speech to the National House Building Council (the people who issue guarantees for new homes) on Thursday which brought the numbers into focus for me and made me determined to step up our efforts.

As a country, we have built too few homes for far too long – and the economic and social consequences are massive. Prices out of reach of too many young families. Our economy vulnerable to boom and bust in the housing market. The housing benefit bill spiralling. Homelessness and overcrowding.

All these problems are solvable but only if we think big.

We’ve been talking about housing in the coalition for well over two years. At every budget and autumn statement we’ve brought forward new measures. We’ve reduced red tape and regulation for house builders. We’ve supported mortgage lending with products to help first time buyers. We’re backing housing associations with £10bn of treasury guarantees.

And yet it isn’t enough. This year we will probably build just 110,000 homes. If that sounds like a lot to you let me put you straight: it’s one of the worst years since the Second World War. When you realise that the population grew by about 270,000 households it’s clear it’s nowhere near enough.

No wonder prices are out of reach for so many families. The average first time buyer is now 35, and home ownership is falling for the first time in a generation.

The only way out of this crisis is to build our way out.

This week I announced funding of £225m to kick start development at eight sites, each with plans for over 5,000 new homes. But I want to think bigger – much bigger. We can’t go on building a home here and a home there and hoping it’s enough.

I want us to go back to some of Britain’s proud heritage of urban development and build a new generation of “garden cities” – places that will grow, thrive and become part of the fabric of the nation.

Of course development is always controversial. It’s right to protect our precious rural landscape and not let England be concreted over. But the point I’ve been making in government (and there have been some lively debates) is that planning big new settlements is the best way to protect our countryside because the alternative is endless urban sprawl.

We could easily build new garden cities totalling a million new homes in the next ten years without building on any green belt, National Parks or Areas of Outstanding Natural Beauty. And by doing it we could deliver homes people can afford in places they want to live.

We can’t do this overnight. Scale and ambition take time. But I believe if we put aside partisan politics and think collectively about the housing needs of the next generation, we could set Britain on track for a major wave of new development, new jobs, and new hope.

It’s an important issue — few more so — and welcome to see Nick focusing on what can be done to make a real difference in housing.

Presentationally, the improvements to the email we’ve seen in recent weeks appear to have been dropped, which is a real shame. Pretty much all the suggestions I made a month ago — which have in the main been incorporated in later letters — have been dropped this time. As a result, we have a long letter with no sub-headings or pictures, no call to action to back Nick’s campaign, no link to this or other campaigns the party’s running, no link to how others can sign up to the Leader’s letters. Sigh.

There is good news, though. Despite the Leader’s Letters keeping it a secret, it is actually possible to sign up to receive Nick’s letters here — so why not forward on his email to supporters you think would be interested in hearing more and let them know how they can receive theirs direct in the future.

* Stephen was Editor (and Co-Editor) of Liberal Democrat Voice from May 2007 to Jan 2015, and writes at The Collected Stephen Tall.

12 Comments

“I’m writing this as we come to the end of an incredibly hectic week in politics.
The negotiations over the budget in Europe, securing of a much needed ceasefire in Gaza, rising speculation about the upcoming Leveson report. And Ed Davey’s important announcement of a landmark coalition deal on low carbon energy that will deliver billions of pounds of investment in clean technology and create thousands of jobs.”

The Justice and Security Bill (‘secret courts’) is a strange omission on the part of a man who at one time told us he would be willing to go to jail in defence of our civil liberties.

I find Nick Clegg inconsistent. He wants to deal with house “prices out of reach for so many families”‘ by building more, i.e. a clear ( and correct) statement that real house prices need to fall. Yet at the same time he is proposing that (at best) moderately wealthy people should invest a fair proportion of their pension fund in housing.

A million homes over ten years is 100k per year. That’s 10% less than the stated to be inadequate 110k per year. If it’s additional, that gives 220k per year, so over the ten years with household formation at 270k per year, we have an increase in the housing shortfall of 1/2 a million, (combined with whatever the shortfall is already, ofc) We need to be aiming at a build rate that over ten years will eliminate the housing shortfall AND cope with the rate of household formation.
Must try harder.

Because taxing the value of the land, thus reducing house prices to their proper level and forcing hundreds of thousands of empty properties onto the market, would hit our Tory chums in the pocket as well as having a damaging political effect because the hundreds of thousands of voters who bought to let or let out their inherited houses would see a significant capital fall.

So Nick, obviously didn’t research and write this speech or have an agenda for this speech prior to delivery – otherwise why would he write: “I gave a speech to the National House Building Council … on Thursday which brought the numbers into focus for me and made me determined to step up our efforts.”

But from the overall tone Nick is still refusing to address the real cause of the housing problem even though it is staring him in the face. Once again he is being a typical useless politician and avoiding the hard decisions, namely what is a sustainable population for the UK and what is our strategy to achieve it. Once you have this everything else follows, including our ability to achieve the 2030 ‘decarbonisation’ target in the Government’s Energy Bill…

Currently it would seem that our population policy is that of New Labour, namely a laissez faire approach and a belief that the growth forecasts are set in stone, rather than merely being projections based on government policy.

I just don’t accept the basic premise that house-building is the way out of the housing crisis. I don’t even think that there is a shortage of buildings for people to live in. The housing crisis is caused by low incomes, high rents and the difficulty of obtaining mortgages. Building more homes won’t solve this problem. Higher incomes and rent controls would make far more of a difference. New houses are as likely to to be bought up by landlords as people wanting to buy a home for themselves. I see plenty of new homes that are executive homes which are unlikely to be of much use to people on low incomes. Where will the people in these new garden cities go to work? How will they get to work? The influence of house-builders over the political parties might be one of the reasons for proposals like this. Sadly, it’s never clear what influence big corporations have over political decisions.

Ed Shepherd: “I don’t even think that there is a shortage of buildings for people to live in. The housing crisis is caused by low incomes, high rents and the difficulty of obtaining mortgages.”

“Low incomes” have to be low in comparison to something: in effect, in comparison to costs. What is clearly true is that the cost of housing has increased relative to incomes over the past 30 years. However, the cost of other things (e.g. food) have fallen.

House prices have doubled in real terms since the mid-1990s – something that has happened in no other developed country in the world except Australia. Meanwhile, the main measure of “housing affordability” (know as the Median Multiple: how many times the median annual gross income is the average cost of a house), which has averaged 3MMs across the English-speaking world for decades, is over 4 in every region, over 5 in most and over 7 in Greater London and some parts of the South West. This means that a family needs >7 median annual salaries to buy a home.

This is certainly true. Rent control would cause enormous hardship as the rental market and new building would dry up. The supply constraints would become far worse, standards would decline and buildings would be abandoned (as has happened in many cities that have tried it). It would possibly benefit those already in rented accommodation but those who were looking, or wanted to trade up, or wanted to move (say, to follow work) would find it far harder.

In fact, rent control is that rare breed of idea: a thing that all economists agree would be a bad idea.

@ Ed Shepherd
Tom Papworth is quite right and you are quiet wrong, I’m afraid. The housing problem is very much one of not enough homes, especially not enough homes in the places where people want to live. Whether you think this is true or not is moot, it IS the case.

A different style of construction is required to make a house affordable to those on lower incomes. Pre-fabricated modular dwellings are needed, which allow the owner to start small and then add rooms easily later on as required.

@Guy Patterson: “A different style of construction is required to make a house affordable to those on lower incomes”

It is a frequently repeated but nonetheless mistaken belief that houses are expensive because house-building is expensive. In fact, the cost of building houses is very reasonable. One policy wonk from a construction-industry trade association told me that a developer can construct a decent-sized, five bedroom house for c.£100,000.

The vast majority of the cost of any house – certainly in high demand areas such as the South East and the West Midlands – is land-prices, and the movement in housing costs since the 1970s is all land-prices. (There are some short-term bubbles due to lax monetary policy, as we saw between 2001 and 2007, but after the 2008 correction prices were still well up on the beginning of the decade).

The dirty little secret that the construction industry doesn’t want to let on is that the shortage of developable land (as a result of our restrictive planning policies) enables them to trade on margin rather than volume – the Planning Laws give them a monopoly that we, as Lib Dems, should be fighting to dismantle.

I agree in part with Guy – a different style of construction is required, but not just for the reason he cites.

The current styles of construction are relatively slow, labour intensive and wasteful of resources (both construction materials and land). The real dirty little secrets of the construction industry is that it slow to change working practices and methods and quick to block change (as evidenced by the current building regulations). As for cost, it is known that high rise apartments are significantly cheaper to build once you get over a certain threshold, hence why a major part of the solution to London’s housing problem specifically is further high rise construction on the scale of the Shard.

Also given that we can expect the UK population to rapidly decline within a couple of decades (a natural consequence of the global megatrends around population, economic development, energy supply, food supply and resources), there is no real reason why we should be building vast numbers of ‘permanent’ settlements…

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